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Russia Report: February 7, 2001


7 February 2001, Volume 3, Number 6
PAN-REGIONAL ISSUES
NAZDRATENKO DOWN -- BUT MAYBE NOT OUT?
After insisting that he would not leave his post, Primorskii Krai Governor Yevgenii Nazdratenko agreed to resign on 5 February following a phone call from Russian President Vladimir Putin and a visit to his hospital room from presidential Control Department head Yevgenii Lisov, "Kommersant-Daily" reported on 6 February. According to RFE/RL's Vladivostok correspondent, Nazdratenko said earlier that if he were to resign early, he would seek re-election. And once Putin signs the law passed recently by the Federation Council and State Duma allowing most regional leaders a third and in some cases even a fourth term, there will be no legal barriers to Nazdratenko participating in a new round of elections in the krai (see "RFE/RL Russian Political Report," 2 February 2001). "Kommersant-Daily" noted that even if Nazdratenko does not seek another term, he can use his administrative resources to back the candidacy of one of his loyal allies, such as new acting Governor Konstantin Tolstoshein, Deputy Governor Valentin Dubinin, or Vladivostok Mayor Yurii Kopylov (see item below). Once elected, they in turn could appoint him as a new representative to the Federation Council, a post which carries with it immunity from criminal prosecution. Two former governors have already been named as new representatives to the Federation Council (see "RFE/RL Newsline," 6 February 2001). Tolstoshein has been called one of the "famous representatives of the local criminal underworld," according to the 1998 book, "Russia's Provinces," by Peter Kirkow. The website polit.ru reported that Tolstoshein, Nazdratenko's "right-hand man," has figured prominently in most local scandals during Nazdratenko's reign. Tolstoshein, a former member of Vladimir Zhirinovskii's Liberal Democratic Party, led the creation of the krai's branch of Unity. JAC

ENERGY CRISIS IN REGIONS CONTINUES, IF NOT WIDENS.
Following President Putin's dismissal of Energy Minister Aleksandr Gavrin on 5 February, new reports of power outages and heating system malfunctions across Russia have appeared. In Orenburg Oblast, about 2,000 apartments in Tyulgan are without heat, while 16 villages in the east of the oblast are without electricity, RFE/RL's Orenburg correspondent reported on 6 February. The previous day, a number of apartments in St. Petersburg were reported to be not getting enough heat, as temperatures outside dipped to minus 25 degrees Celsius, according to "Segodnya" on 6 February. Meanwhile, in Ulan Ude, the emergency situation declared following an accident at one of the city's electricity stations on 3 February was extended, and in a raion in Samara around 17,000 people are without heat following a break in a heating pipe due to the severe cold, RFE/RL's Samara correspondent reported on 5 February. Also without heat are villages in Chita Oblast, Chukotka Autonomous Okrug, and Yakutia, according to the Emergencies Ministry, ITAR-TASS reported. On 2 February, Tambovenergo's press service announced that it will stop the supply of hot water and reduce heating to houses in the regions beginning 5 February because of the city's outstanding debts, ITAR-TASS reported on 2 February. And officials in the city of Voronezh are bracing for possible cuts because of outstanding debts worth 386 million rubles ($13.6 million) to Voronezhenergo, "Nezavisimaya gazeta-politekonomiya" reported on 6 February. JAC

FEDERATION COUNCIL CHAIR SAYS UPPER CHAMBER NOT TO DISSOLVE INTO FACTIONS...
Following a meeting with President Putin and some of the new members of the Federation Council on 1 February, Federation Council Chairman Yegor Stroev told reporters that Putin reassured Stroev and the other senators that the Federation Council will continue to exist because a two-chamber parliament is important for the stability of the country, Interfax reported. Stroev also reported that the new members agreed to spend at least 10 days a month working in the regions they represent. According to "Vremya MN" on 3 February, Stroev claimed that during the meeting with Putin, the new members "categorically rejected the possibility of creating factions in the upper chamber." Stroev and some other members of the Federation Council have objected to the division of the upper house into factions because they believe senators should represent the interests of their regions rather than of parties. "Rossiiskaya gazeta" reported the previous day that already one-fifth of the seats in the chamber are filled by the new type of senator, "who works on a full-time basis." That daily concluded that new representatives appear to be of two basic types: either Muscovites who are members of Unity, or former members of the Federation Council, such as former Krasnodar Krai Governor Nikolai Kondratenko, former Chukotka Governor Aleksandr Nazarov, former Chita Oblast Duma speaker Vitalii Vishnyakov, and former Bryansk Oblast Duma speaker Stepan Ponasov. Representing the first type of new senator is Sergei Popov, chairman of Unity's executive committee, who will represent Ust-Orda Autonomous Okrug, and Mikhail Margelov, who represents Pskov Oblast. JAC

...BUT HE IS SAID TO FACE IMMINENT 'TRANSFER.'
Meanwhile, both "Segodnya" (31 January) and "Moskovskii komsomolets" (2 February) reported that the Kremlin wants to change the traditional non-party orientation of the upper house so that it will become more easily controllable, and that it wants to make Stroev, a key opponent of factions, chairman of the new parliament of the Union of Belarus and Russia. According to both dailies, Popov would then be elevated to Stroev's position. Both newspapers seemed to base their stories on unidentified sources in the Kremlin and Unity. However, "Kommersant-Daily" reported on 2 February that at least two of the new senators, Marii El Republic representative Aleksandr Torshin and Kostroma Oblast's Ivan Starikov, deny that they are planning to enter a new Unity grouping in the upper house. According to the daily, both Torshin and Starikov say they are "conservatives" and that with many tasks before it, the council shouldn't be divided. Torshin is an associate of the presidential envoy to the Volga Federal District, Sergei Kirienko, and worked as the state secretary of the Central Bank when Sergei Dubinin was chairman (see "RFE/RL Russian Federation Report," 24 January 2001). Starikov is a former deputy economics minister who worked on the long-term economic plan of Economic Development and Trade Minister German Gref and recently ran unsuccessfully for governor of Novosibirsk Oblast (see "RFE/RL Russian Federation Report," 12 January 2000). JAC

FOREIGN MINISTRY TO OPEN NEW BRANCHES...
The Foreign Ministry plans to open a branch office in Yekaterinburg that will coordinate international and foreign trade ties for the six regions located in the Urals Federal District, "Izvestiya" reported on 2 February. According to the daily, the Foreign Ministry is planning to open branches in each region within the district, pending the approval of Prime Minister Kasyanov's cabinet. The daily claims that the presidential envoy to the Urals Federal District, Petr Latyshev, is trying to comply with President Putin's orders to restrain regional leaders' forays in foreign policy-making. Latyshev's deputy, Vladislav Tumanov, recently met with Foreign Minister Igor Ivanov to discuss the details of this plan. The daily also notes that it is particularly appropriate that the Foreign Ministry's first branch is opened in the Urals district since that region is active in foreign trade. In an interview in "Nezavisimaya gazeta" on 31 January following his participation at the recent world economic forum in Davos, Volga district presidential envoy Sergei Kirienko said that he fielded a lot of questions from other participants regarding the new federal arrangement in Russia. He said: "I was frequently asked about Russia's efforts to streamline legislation because investors understand the importance of creating a common legal space." He added that the pragmatic businessmen at Davos consider the federal districts "an instrument for implementing state power." JAC

...AS NUMBER OF FEDERAL WORKERS TO BE CUT?
As the Foreign Ministry is considering opening a new branch in Sverdlovsk Oblast, Igor Prostyakov, first deputy presidential envoy to the Siberian Federal District, announced on 31 January that the number of federal workers in his district will be reduced, Interfax-Eurasia reported. According to Prostyakov, a restructuring of all federal organs in the district is expected in spring of this year. Prostyakov said that the number of such workers in his district is unjustifiably high, because the federal center has for a long time been transferring part of its functions to the regions. As a result, the number of bureaucrats taken in to perform these tasks increased by five to 10 times. At the same time, according to Prostyakov, the large number of bureaucrats did not stop the regions from making improper economic and administrative decisions. Yevgenii Primakov, during his brief stint as prime minister, once estimated the number of federal bureaucrats employed in the regions at more than 300,000. An unidentified high-level Kremlin source told ITAR-TASS last week that the envoys are working on suggestions to improve their own work and possibly reduce the number of federal personnel in their regions (see "RFE/RL Russian Federation Report," 31 January 2001). JAC

ENVOY CALLS FOR IMPROVING TERRITORIAL ARRANGEMENTS WITHOUT ALTERING CONSTITUTION.
Viktor Cherkesov, the presidential envoy to the Northwestern Federal District, on 1 February offered his thoughts on the current debate over whether the separate status of autonomous okrugs should be abolished (see "RFE/RL Russian Federation Report, "31 January 2001). Cherkesov suggested that a thorough analysis of the current system of administrative-territorial arrangements of the Russian Federation should be undertaken, ITAR-TASS reported. He noted that within his own district, residents of Nenets Autonomous Okrug participate in the election of the head of the administration for Arkhangelsk Oblast as well as in the election for the head of their okrug. At the same time, he pointed out that the titular nationalities of Nenets A.O. and of the autonomous okrugs in neighboring Tyumen Oblast do not form a majority of the population of those areas. However, he concluded that these and other obvious asymmetries in the relationships among autonomous regions, regions, and federal districts should be resolved within the framework of the current constitution. JAC

EVENK
ANOTHER OLIGARCH, COMPANY POISED TO TAKE OVER SMALL REGION.
Evenk Autonomous Okrug Governor Aleksandr Bokovikov has informed the local election commission that he does not plan to seek re-election in the ballot scheduled for 8 April 2001, Interfax-Eurasia reported on 3 February. According to "Kommersant-Daily," the head of development board of the oil company YUKOS Boris Zolotarev plans to run for the post. His company also happens to be the chief employer in that region. The daily suggests that YUKOS has taken its cue from Sibneft and Interros regarding participating in elections in autonomous okrugs. Former Sibneft head Roman Abramovich was recently elected head of Chukotka Autonomous Okrug, while Norilsk Nickel head Aleksandr Khloponin was elected head of Taimyr Autonomous Okrug. Norilsk Nickel is owned by Vladimir Potanin's Interros Group. While visiting Krasnoyarsk Krai on 3 February, Emergencies Minister and Unity party head Sergei Shoigu said that he supported Bokovikov's decision not to run. JAC

KALMYKIA
ILYUMZHINOV BEGINS TO FEEL THE HEAT FROM FEDERAL GOVERNMENT.
In elections held on 4 February for the mayor's post and that of city council of Elista, the capital of Kalmykia, most of the candidates controlled by Kalmykia's president, Kirsan Ilyumzhinov, were re-elected, "Kommersant-Daily" reported on 6 February. According to preliminary information, only two opposition candidates, Ivan Ryzhkov from Yabloko and Natalya Manzhikova from the Union of Rightist Forces, were elected to the city council. Yabloko's press service reported on 2 February that its candidates running for city council seats received death threats by telephone almost every day before the election, Interfax reported. The callers reportedly mentioned the fate of Larisa Yudina, a journalist who was slain for her investigations of official corruption in the region (see "RFE/RL Newsline," 9 and 12 June 1998). According to Yabloko, some opposition candidates were also dismissed from their jobs, while others, such as Vladimir Kolesnik, who "according to public opinion polls would make the most realistic candidate for mayor of Elista," were unable to register to participate in the elections. However, the political opposition in Kalmykia are happy about at least two local developments: the prosecutor-general has named a new prosecutor for the republic and the Audit Chamber is conducting an audit in the republic, according to "Kommersant-Daily." Last week Audit Chamber head Sergei Stepashin said that serious results likely to attract the attention of law enforcement officials are expected from the audit. JAC

PRIMORE
CHEREPKOV TO VIE AGAIN FOR GOVERNOR'S POST.
Following quickly on the news of Primorskii Krai Governor Nazdratenko's resignation, former Vladivostok Mayor and State Duma deputy (independent) Viktor Cherepkov announced that he will participate in upcoming gubernatorial elections in that region, RFE/RL's Moscow bureau reported on 6 February. According to the krai's election commission, the gubernatorial election must take place no later than 20 August. According to Cherepkov, the governor's "team" will likely seek to fill the post with one of their own, but it will probably not be current acting Governor Tolstoshein, who is said to be too unpopular in the region, but some other less well known deputy of Nazdratenko. (Tolstoshein received less than 1 percent of the vote in 1993 Vladivostok mayoral elections.) According to Interfax on 6 February, Nazdratenko signed a decree naming his first deputy governor, Valentin Dubinin, to replace him, and Tolstoshein has been acting as acting governor only because Dubinin is currently outside of the krai. JAC

SAMARA
LOCAL ENVIRONMENTAL ACTIVIST KILLED.
RFE/RL's Samara correspondent reported on 6 February that Aleksandr Solovykh, a well-known activist in the city of Samara who worked with the ecological movement Khraniteli padugi, has been found dead in his apartment. Nikolai Elizarov, leader of Samara's branch of Amnesty International, told RFE/RL that Solovykh was engaged in many controversial issues connected with the ecology of the Volga river basin and the activities of a factory in Chapaevsk which destroys chemical weapons. Elizarov said that he fears that "in the case of Aleksandr Solovykh we may have one of the first political murders in Samara." Local law enforcement officers have so far refused to comment. JAC

TULA
INCUMBENT JOINS INTERESTING CAST IN GOVERNOR'S RACE.
Tula Governor Vasilii Starodubtsev has announced that he will seek re-election in the ballot in that oblast scheduled for 8 April, Interfax reported on 2 February. Starodubtsev, a Communist, is perhaps best known for his role in the 1991 coup against Soviet President Mikhail Gorbachev. So far, Starodubtsev will compete against Andrei Nechaev, a former Economics Minister under acting Prime Minister Yegor Gaidar, Tsentrgaz General-Director Viktor Sokolovskii, Leninskii Raion head Andrei Samoshin, former priest Aleksandr Luganskii, and possibly Andrei Brezhnev, the grandson of Soviet leader Leonid Brezhnev. Supporters of Brezhnev, who is general secretary of the All-Russian Communist Public Political Movement, are still gathering signatures to support his candidacy, according to ITAR-TASS. Luganskii, who unsuccessfully tried to run for president of Russia, is considered a bit "unbalanced," having cut off one of his little fingers with a kitchen knife at a press conference on 1 February. JAC

YAROSLAVL
GOVERNOR ALLEGED TO HAVE KEEN INTEREST IN SPORTS.
The administration of Yaroslavl Oblast is devoting an increasing share of its budget to sports, particularly for its "elite soccer and hockey teams," "Nezavisimaya gazeta-regiony" reported on 30 January. According to the semi-monthly, the oblast budget set aside some 80 million rubles ($2.8 million) for "the financing of health maintenance and physical culture" -- a 230 percent hike over last year's sum of 24 million rubles. Of the 80 million, 60 million will be spent on the soccer team, Shinnik, and the hockey team, Lokomotiv. According to the newspaper, the president of Shinnik's soccer team is Nikolai Tonkov, the general director of the Yaroslavl Tire (shinii) Factory. Tonkov is part of the circle of businessmen close to Yaroslavl Governor Anatolii Lisitsyn, and his factory regularly receives tax breaks from the oblast budget on the order of tens of millions of rubles. The daily also reported that the chief sponsor of the Lokomotiv hockey team is the Northern Railway, which also receives tax breaks from the oblast budget. According to the semi-monthly, the oblast administration last year amassed a backlog of unpaid social payments to children in the area worth around 400 million rubles -- which it apparently does not plan to pay. JAC

CORRUPTION WATCH
KEMEROVO.
The prosecutor-general of Kemerovo Oblast has accused former Kemerovo Oblast Governor Mikhail Kislyuk of abuse of office and misusing budget monies worth some 290 million undenominated rubles, "Vremya Novostei" reported on 24 January. Kislyuk, who now resides in Moscow, told investigators from the region that if he were to be convicted of that crime now he would be eligible for amnesty....KRASNOYARSK. The prosecutor-general of Krasnoyarsk Krai has dropped criminal proceedings against former Governor Valerii Zubov, Zubov's former deputy, Valentina Cherezova, and former deputy chairman of the krai duma's budget committee, Viktor Gitin, because of a lack of evidence of a crime, "Novye Izvestiya" reported on 1 February. In October 1999, Zubov had been accused of misusing federal budget monies (see "RFE/RL Newsline," 6 October 1999). JAC

END NOTE
TRANSREGIONAL ECONOMIC ELITES AND THE ELECTION IN ULYANOVSK

By Andrew Konitzer-Smirnov

Despite the alarm surrounding the militarization and "verticalization" of Russian federalism, developments in Ulyanovsk Oblast suggest that "horizontal� politics still play a strong role in determining the outcome of regional elections. In fact, the focus on newly-elected Governor Vladimir Shamanov's military ties and unfounded speculation about President Vladimir Putin's support for his candidacy have overshadowed a much more intriguing development: New transregional economic groups are seeking to ensure their investments in neighboring oblasts by supporting sympathetic candidates.

In March 2000, the first rumors of General Shamanov's intention to run in the upcoming December elections appeared in Ulyanovsk's regional press. Hero of Russia, and commander of the 58th Army, Shamanov participated in both Chechen campaigns, gaining notoriety throughout Russia as one of the Russian federation's top military leaders. His decision to run for Ulyanovsk's governorship naturally attracted the attention of a host of Russian and foreign observers who claimed that the 2000 elections would mark not only the strengthening of vertical power structures but also the gradual militarization of the Russian Federation. The subsequent course of his campaign, characterized by curiously strong financial and organizational support, and the subsequent extent of his victory -- 58 percent of the votes compared to incumbent Governor Yurii Goryachev's 24 percent -- only fed the contention that Shamanov's victory was guaranteed by the Kremlin.

However, at no point during the campaign did Putin make any clear statement of support for Shamanov. In fact, the actions of both the president and presidential envoy for the Volga Federal District, Sergei Kirienko, at times even supported -- intentionally or otherwise -- the position of the incumbent governor. In late November, Kirienko paid a visit to the oblast to investigate the growing energy crisis in the region. At the conclusion of his visit, he organized a tripartite agreement between the regional administration, municipal authorities, and regional energy concerns which not only freed all involved from taking responsibility for unpopular measures like the raising of tariffs, but also provided for a 70 million ruble ($2.5 million) loan to offset fuel costs and eliminate wage arrears for federal workers. On 6 December, a mere two weeks before the elections, Goryachev met with Putin in Moscow and returned to the oblast with a memo from the president himself asking Prime Minister Kasyanov and Kirienko to support Goryachev's 2001-2005 development program for the oblast. Both of these visits did nothing to undercut Goryachev's shaky position in the region and even provided ample means for the incumbent's campaign team to demonstrate that the governor enjoyed the Kremlin's full support.

These and other factors undermine the argument, advanced by Aleksandr Ostravsky writing in the "Financial Times" in December, and other observers, that Shamanov was "sent" by Putin "to re-take" Ulyanovsk. However, if the Kremlin did not support Shamanov's campaign, who did? Why did Goryachev, who had ruled the oblast for nearly 14 years, lose the 2000 election? Recent appointments to Ulyanovsk's nascent oblast administration and a re-examination of a number of pre-election economic "events� suggests that transregional economic actors, and not the Kremlin, played a key role in ensuring the success of Shamanov's bid for the governorship.

In the years between 1996 and 2000, three major Samara business groups expanded their operations into Ulyanovsk oblast. "Volgatrangaz," a large, Samara-based enterprise which manufactures equipment for extracting and transporting natural gas, was one of the first such groups. Owned by Gennadii Zvyagin, the firm now controls operations in a number of middle-Volga regions; it moved into the Ulyanovsk market soon after the 1996 elections. Volgatrangaz also established its own financial institution in Ulyanovsk with the opening of a "Gazbank" affiliate in the city of Ulyanovsk. Of the Samara business interests operating in Ulyanovsk at the time of the election, Gennadii Zvyagin was perhaps the most vocal supporter of Shamanov, giving interviews to regional media, meeting with the general during his visits to Samara, and pledging the support of the Volga district branch of Unity. Zvyagin currently heads the Volga district's party apparatus.

In early 2000, a second Samara-based group expanded operations into Ulyanovsk: The "SOK" group, which originated as a car dealer for AvtoVAZ and later expanded operations into the entertainment, construction, and service industry, gained control of the Dimitrovgrad (Ulyanovsk) Auto Aggregate Plant (DAAZ). This brought a major employer for the city of Dimitrovgrad under the control of Samara entrepreneurs and prompted the first public accusation of a link between Samara and Shamanov. In an interview with NTV on 11 September, Goryachev mentioned that the "so-called SOK along with Samara and Tolyattii-based criminals" were financing Shamanov's campaign. While Goryachev certainly put his own characteristic spin on events by playing to the interest of local citizens in maintaining order and avoiding the chaos and criminality of market reforms, a subsequent article in the business journal "Profil" (issue no. 35), contained information from an "informer" at SOK claiming that the firm indeed planned to provide financial support for the general's upcoming election campaign.

In November of 2000, a third major Samara-based economic actor entered the scene. Vladimir Avetisyan, director of the Volgapromgaz group, became head of the just established Middle-Volga Inter-regional Energy Company (SMUEK). Anatolii Chubais's Unified Energy Systems holds 100 percent of this firm's stock. It operates the electric system in several middle-Volga regions -- including Ulyanovsk. With Avetisyan heading SMUEK, Ulyanovsk's entire energy network came under the control of Samara-based economic actors. Given the fact that Volgapromgaz was initially established as a "satellite" company of Volgatrangaz, Avetisyan maintains close ties to Zvyagin's circle and the two groups are expected to support one another in their operations outside of Samara.

These examples provide some indication of the extent to which outside interests -- particularly from neighboring Samara -- penetrated the Ulyanovsk market following the oblast's 1996 gubernatorial elections. Of course, the temporal relation between these events and the outcome of the 2000 election provides only speculative evidence for a Samara-Shamanov link. However, post-election appointments to the new administration certainly strengthen this hypothesis. According to "Samarskoe Obozrenie" on 15 January, Gennadii Zvyagin's son, 28-year-old Aleksandr, was appointed to the Ulyanovsk Oblast administration's departments of heating and energy, and transport, and communications. Another piece published in "Simbirskii Kurer" on 25 January stated that Vladimir Tsarev, former vice director of Volgatrangaz, was appointed to head the same two departments. Furthermore, a representative from Volgatrangaz told this author that no fewer than 10 employees of Zvyagin's company had left to take various positions in Shamanov's new administration. Clearly, Volgatrangaz is destined to play an important role in the oblast's developing governance structures.

Taking these observations as a whole, one can draw an alternative to the "Putin's general" thesis. As indicated above, since Ulyanovsk's last gubernatorial election in 1996, a number of strong external business interests established a presence in the region. Having entered into the oblast's market, these groups collided with the existing crude system of patron-client relations that had characterized economic policymaking throughout the late 1990s in Ulyanovsk. Shamanov's election bid offered the opportunity for these groups to alter this set-up in their favor. In exchange for their political support, the Samara business groups will be given the green light by Shamanov and his administration to exploit their existing operations in the region. And, the new Volgatrangaz "diaspora" will apparently play an active role in oblast policymaking.

In the case of Ulyanovsk, the "vertical structures" of Russia's federalism have not eliminated the importance of more "traditional" horizontal dynamics. However, in the middle-Volga, these dynamics have "spilled over" into neighboring regions, heralding the creation of new transregional groups based in regions that lie beyond the Moscow city limits.

Andrew Konitzer-Smirnov (ackst8@pitt.edu) is a Ph.D. candidate from the University of Pittsburgh's Department of Political Science. His current research examines the impact of regional economic performance on the results of the year 2000-2001 round of gubernatorial elections.

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